A pay-per-mile electric vehicle tax set for 2028 will create a 'postcode penalty' with the highest costs in rural and low-income areas, according to a new analysis by the British Vehicle Rental and Leasing Association.
The Chancellor's new pay-per-mile tax on electric vehicles , set to begin in April 2028, will create a stark ' postcode penalty ' that disproportionately impacts drivers in rural and poorer areas.
Chancellor Rachel Reeves plans to charge electric vehicle (EV) owners 3 pence per mile driven, while plug-in hybrid (PHEV) owners-those with vehicles capable of up to 70 miles on electric power-will face a 1.5 pence-per-mile levy on top of existing fuel duty. This policy, known as the electric vehicle excise duty (eVED), aims to address a growing shortfall in Treasury finances.
As petrol and diesel sales decline, fuel duty receipts are falling, and the Office for Budget Responsibility (OBR) estimates this gap at around £1 billion per year. The government intends to close that gap by taxing EV use for the first time.
However, analysis conducted by the British Vehicle Rental and Leasing Association (BVRLA) reveals that the tax burden will fall heaviest on those least able to absorb it. EV drivers in areas with poor public transport-often regions with lower household incomes-will face the steepest bills. The study indicates some drivers could pay up to £267 on top of the standard £200-a-year Vehicle Excise Duty (VED) rate.
With higher insurance premiums and rising charging costs already straining household budgets, the added levy risks further discouraging the switch to electric vehicles, particularly for families and individuals in rural communities. The BVRLA calculated the eVED cost for each of the UK's 632 parliamentary constituencies by examining average annual mileage using MOT data, alongside EV and PHEV ownership statistics.
Projecting forward to April 2028 based on current adoption rates, the association derived an average pay-per-mile cost for EV and PHEV owners nationwide. On average, EV drivers can expect an annual pay-per-mile charge of £218, while PHEV owners will pay about £109 per year. To assess which areas would be hit hardest, the BVRLA combined its findings with child poverty data from the House of Commons Library, creating a deprivation rating for each constituency.
The results show that motorists in poorer rural constituencies will experience the greatest eVED impact, not only due to lower incomes but also because limited public transport options lead to higher annual mileage. Drivers in Scotland are expected to feel the pinch especially acutely.
The report identifies 18 of the 50 highest-mileage constituencies as being north of the border, with Stirling and Strathallan (6,827 miles), Dumfriesshire, Clydesdale and Tweeddale (6,823 miles), and Caithness, Sutherland and Easter Ross (6,711 miles) topping the list. That translates to annual eVED costs between £201 and £205 for EV drivers, and just over £100 for PHEV owners.
In contrast, London's ten least-affected constituencies all have median mileages below 4,000 miles per year, resulting in eVED charges of about £120 for EV owners. This disparity stems from greater access to public transport, cycling infrastructure, and lower car dependency in the capital. Significant costs also await some drivers in England. Constituencies such as Hayes & Harlington, Ely & East Cambridgeshire, Doncaster East, and South West Norfolk face some of the highest levies, all exceeding £250 per year.
Moreover, many of the country's most deprived constituencies will see EV drivers paying over £200 in eVED charges. Birmingham Ladywood, which has the highest child poverty rate in the UK at 53.8 per cent, is one such example. Similarly, drivers in Bradford West-ranked third for child poverty-will see running costs rise by more than £200.
The starkest contrast lies with the Cities of London & Westminster, one of the nation's most affluent areas, where the annual eVED levy is just £116. The BVRLA describes these findings as exposing an 'EV postcode penalty'-a system that structurally disadvantages drivers who are least able to reduce their mileage and least likely to have access to public transport, charging infrastructure, or the household income that would make EV ownership straightforward.
Chief Executive Toby Poston cautioned that while the policy may appear fair on paper, in practice it falls hardest on the drivers least able to avoid it. The analysis underscores the need for a more nuanced approach to EV taxation that considers regional disparities in mobility, income, and infrastructure. Moving forward, the government faces mounting pressure to reconsider the design of the eVED.
Critics argue that a flat per-mile charge ignores the vast differences in travel patterns across the UK and could undermine the broader goal of decarbonizing transport. Rural communities, which already face challenges in accessing services and employment due to limited transport options, risk being further marginalized. As the 2028 implementation date approaches, expect heightened debate over how to fund road maintenance without penalizing those who have no practical alternative to private car use.
The outcome will be a critical test of whether the UK's transition to electric vehicles remains equitable or entrenches existing geographic and economic divides
Electric Vehicles EV Tax Pay-Per-Mile Rural Drivers Postcode Penalty BVRLA Rachel Reeves UK Budget Vehicle Excise Duty Deprivation
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